Asia is at the cusp of a very interesting diversification strategy that a lot of companies are following. At one level, we say that all companies want to diversify; at the same time, we know that most supply chains are interconnected. Looking at the $18 trillion of global trade, it’s interesting that 25 percent of that is expected to potentially move from where it originates.
Asia tends to gain a lot of that 25 percent. But while people keep talking about China+1, they realize that pretty much everything is—in some way, shape, or form—going to remain connected to China. Hence, even while Asia is growing, China is going to continue to have at least two times the exports versus the rest of Asia.
If you take intra-Asia itself, 50 percent of the trade is happening within Asia for Asia, which means it is an originator of trade and a destination country for trade. As a result, going forward, while Asia is going to be at the core of diversification, it is also going to rely a lot on partners around it to ensure its growth.
Asia must also adapt to global uncertainties in supply chain management. There are three specific things that matter.
The first is resilience. It remains top of mind for manufacturers. With crisis after crisis in global supply chains, this is not about a buzzword. This is about: How can I make my supply chain stronger? How can I use digitization? How can I use autonomous planning? How can I use generative AI to ensure I have a better sense of what’s going to happen to my supply chain, and to forecast these shocks and their impact?
The second thing is sustainability. Sustainability is not about needing to increase cost. Sustainability is about: How do I find new ways of doing things that are better for the climate and the environment, and at the same time better in terms of products? And it does not always have to be a cost escalation. There are ways—for example, with electric vehicles—that you can have a cost reduction and still be more sustainable.
The third thing tying all this together is digitization. We have seen digitization take on a new world of its own. In an Asian context, I think this is where Asia is at the forefront. If you look at the World Economic Forum Global Lighthouse Network, three out of every five Lighthouses are in Asia. This also shows that a lot of manufacturers have utilized digitization for what it’s truly worth—going beyond just pilots and ideas, to real transformations that are changing the way manufacturing is taking place.